The Importance of Bank Reconciliations
While reconciling bank accounts may be fun for us accountant types, we realize that it may not be your idea of fun. I think we can all agree that overpaying for anything isn’t fun for any of us though. Bank reconciliations help prevent just that by making sure that checks clear from your bank account for the proper amount and only clear once. When done properly, they help you to identify potential issues early on and address them accordingly.
With the advancements in electronic and mobile banking, individuals and businesses alike now have the ability to deposit checks via an image of the check. When doing so, the individual or business is often instructed to retain the physical check for a period of time after the deposit. We have seen several instances in which an individual deposits a check using a mobile deposit feature with their bank and then sets the check aside. They eventually find the check and by that time, have forgotten that they ever deposited it in the first place. They then redeposit the check. Without a positive pay feature established on your bank account, the check will clear your account a second time. This means you have just double paid the individual. If you are doing timely bank reconciliations, you will discover the error and your bank will rectify the situation. While it appears the instances we have seen are innocent in nature, it’s easy to see how an opportunistic person could take advantage.
This is just one reason why we recommend reconciling your bank account on a regular basis. If you have questions on how to do this, we can help.